Commercial operations are scheduled to start by the end of 2023 or in early 2024.

“The timing is right to restart construction on our Geismar 3 project as the methanol industry outlook is positive, we have a strong financial position to fund the project and the project has been significantly de-risked and is well positioned to be completed on-time and on budget,” said CEO John Floren.

The company has recently completed deleveraging initiatives and credit facility amendments to boost its balance sheet. It is also now estimating the project’s total costs to be slightly lower at between $1.25 billion and $1.35 billion, compared with a prior estimate of $1.3 billion to $1.4 billion.

Methanex is anticipating strong demand for methanol, averaging about 4% annually over the next five years, equating to about 16 million t. That forecast compares with just 14 million t of capacity additions during the same period, including Geismar 3. With limited project commitments beyond 2022, industrial operating rates will need to increase to meet growing demand, the company said, adding that Geismar 3 is its only major growth capital project expected over the next few years.

At the same time as approving the restart of work on Geismar 3, Methanex’ board of directors has agreed key commercial terms with Mitsui O.S.K. Lines for a shipping partnership. Methanex expects the agreement to realize strategic benefits for its Waterfront Shipping business and unlock $145 million in non-dilutive capital to further strengthen its financial position.

Mitsui O.S.K. Lines will pay $145 million for a 40% stake in Waterfront Shipping – Methanex will retain a majority 60% stake in the business.

The agreement needs formal approval from Mitsui O.S.K. Line’s board of directors, as well as regulatory approval, but is due to be finalized by the end of the year.

Author: Elaine Burridge, Freelance Journalist